6 Things You Should Consider While Having the Best Car Loan in India

Banks have made insurance mandatory for availing auto loans. Recent, Supreme Court ruling has made purchasing upfront three to five-year insurance cover compulsory.

#2. Loan Amount

Most of the lenders require you to make a downpayment of 5% to 80% upfront which is also called margin. Only HDFC and ICICI Bank finance 100% of the ex-showroom price.

However, the ex-showroom price does not include local duties and statutory charges.

#3. Period of Loan

You can get a car loan with a maximum period of 7 years. EMI will be less for a longer period loan but the amount of interest paid will be higher.

Remember shorter term will have lower rates.

#4. Interest Rate

The interest rate is the key differentiator while finalizing a car loan. Banks offer fixed as well as floating interest rates ranging from 8.65% to 11.50%.

Do not get fooled by the lower flat rate of interest. A flat 10% interest rate can cost you more than 15% interest rate charged on reducing balance.

#5. Processing Fees and Time

The banks charge processing fee as a flat amount ranging from Rs. 3000 to as high as Rs. 10000 or as a percentage of loan amount between. The processing charges are around 0.5% of the loan amount.

#6. Prepayment or Foreclosure Charges

Usually, banks levy around 5 to 8% as prepayment or foreclosure charges. You may tend to prepay or foreclose loan as soon as you receive extra money hence go for a bank with lowest foreclosure charges.

PRO TIP – Other things being equal, a good way to benchmark the cost of car loans is EMI. Compare EMIs across loan products for the same tenure and loan amount.

Plan to buy a car in the festival season to avail lucrative festival offers

Best Car Loan in India

#1. SBI Bank Car Loan

SBI finances up to 90% of on road price for brand new passenger cars including MUVs and SUVs.

The benefits of SBI bank car loan is that there are NIL processing charges with no prepayment penalty or foreclosure charges. The maximum car loan tenure is of 7 years and the interest calculation is on daily reducing balance.

SBI Bank Car Loan Interest Rate

Fixed Rate – 9.30% to 9.80%

Loan amount – 90% of on road price

Processing charges – NIL

Prepayment or foreclosure charges – NIL

Insurance – optional SBI life insurance cover

SBI Bank Car Loan Eligibility

Borrower

Salaried employee

Professionals, self-employed

Persons engaged in agriculture

Age

21 to 65 years

21 to 65 years

21 to 65 years

Income

Minimum 2.5 Lacs p.a

Net profit or GTI* of 3 Lacs p.a

Net annual income Rs. 4 Lacs

Maximum Loan Amt

48 times net monthly income

4 times net profit or GTI

3 times net annual income

*GTI – Gross taxable income

Documents Required

Salaried employee

Professionals, self-employed

Persons engaged in agriculture

Identity and address proof

Identity and address proof

Identity and address proof

Latest salary slip, Form 16

last 2-year ITR and audited balance sheet

Documentary proof of land ownership and activity

6-month bank account stm

6-month bank account stm

6-month bank account stm

Other SBI Car Loan schemes

SBI Loyalty car loan scheme for home loan borrowers

SBI assured car loan scheme- based on 100% FD for on road price

SBI car loan lite scheme – for persons engaged in economic activity which gives income but with no proof of income

What We Like

No processing charges

NIL prepayment penalty or foreclosure charges

What We Didn't Like

Longer processing time

Favours customers having salary account with SBI

#2. HDFC Bank Car Loan

A Car loan from HDFC Bank has features like a step-up loan, balloon repayment schemes, top -up loans with flexible repayment tenure.

The bank finance a wide range of cars and multi-utility vehicles up to Rs. 3 Crores for tenure up to 84 months.

HDFC Bank even has autopedia mobile app to help customers to compare, research and read reviews on new cars or even apply for a loan.

HDFC Bank Car Loan Interest Rate

Rack interest rate 9.75% to 10.60% depending on the segment of the vehicle.

Prepayment or foreclosure charges – up to 6% of the principal outstanding.

Insurance – Comprehensive Suraksha Kawach insurance from HDFC

HDFC Bank Car Loan Eligibility

Borrower

Salaried

Professionals, self employed

Age

21 to 53 years

21 to 58 years

Income

Min 3 Lacs p.a

Earn 3 Lacs p.a

Employment/ Business status

Job for 2 years, 1 year with current employer

In business for 2 years

Others

Need to have a telephone or postpaid mobile

Documents Required

Salaried employee

Professionals, self employed

Identity and address proof

Identity and address proof

Latest salary slip, Form 16

Last 2 year ITR and audited balance sheet

6 month bank account statement

6 month bank account statement

What We Like

Flexible repayment tenure

Quick loan approval

What We Didn't Like

Foreclosure charges

2% Overdue EMI interest

#3. Axis Bank Car Loan

The unique benefit of Axis Bank is that you earn edge rewards points for taking a car loan. 350 reward points if post disbursal documents are submitted within 60 days of first loan installment being disbursed.

Axis bank offers maximum loan up-to 100% of the on road price for a longer tenure of up to 8 years.

Axis Bank Car Loan Interest Rate

Starting at 9.25% to 11.50%

Loan amount – 100% of on road price

Processing charges – Minimum Rs. 3500 and maximum Rs. 5500.

Prepayment or foreclosure charges – 5% of the principal outstanding.

Axis Bank Car Loan Eligibility

Borrower

Salaried

Professionals, self employed

Age

21 to 70 years

18 to 75 years

Income

Min 2.4 Lacs p.a

Min 1.8 Lacs p.a

Employment/ Business status

1 year with current employer

In business for 3 years

Documents Required

Identity and address proof

Application form

Age Proof

Income proof & Bank statement

Signature verification proof

Invoice or rate list

What We Like

Longer tenure of 8 years

Earn edge reward points

100% on road price

What We Didn't Like

2% Penal interest for late payment

Favors priority, wealth and privee banking customers

#4. PNB Bank Car Loan

PNB finances the purchase of a new car, jeep, van, multi-utility and sports utility vehicles. The bank even reimburses within 3 months the cost of a new car purchased out of own funds.

Prepayment or foreclosure charges – NIL from own sources. 1% in case of loan takeover.

Central Bank of India Car Loan Eligibility

For all borrowers

Age

18 to 65 years

Gross annual income for both salaried and self-employed

Rs. 2.4 Lacs

Documents Required

Salaried

Professionals, self employed

Loan Application

Loan Application

Age, Identity and Address Proof

Age, Identity and Address Proof

3 month Salary slip, 2 years ITR

Balance Sheet and ITR for last 3 years

6 months Bank statement

12 months Bank statement

What We Like

10% margin for a loan up to Rs. 20 Lacs

Fixed and floating rate car loan

What We Didn't Like

36 months period for a fixed rate loan

Car Loan Interest Rate Comparison

Bank

Car Loan Interest Rate

SBI Bank

9.30% to 9.80%

HDFC Bank

9.75% to 10.60%

Axis Bank

9.25% to 11.50%

PNB

9.05% to 9.50%

ICICI Bank

8.65% to 16.70%

Magma Fincorp

12% to 16%

IDBI Bank

9.30% to 9.90%

Sundaram Finance

8.75% to 11%

Bank of Baroda

8.90%+SP to 10.65%+SP

Federal Bank

9.2%

Central Bank of India

MCLR + 0.4%

Car loan EMI calculator

Coming Soon..

Factors that Affect Car Loan Interest Rate

Relationship

A good long-standing relationship can help you bargain not only a higher car loan amount but also at a reduced interest rate. This happens because of patronage and the bank is aware of your financial status and dealings.

Credit Report

Higher credit scores above 700+ reflect creditworthiness. Banks are keen to offer lesser interest rates to persons with high scores in comparison to an individual with lower scores.

Amount of Loan or Down Payment

Higher the down payment, the lesser will be the loan amount which shows a sound financial standing. Which can help you get a lower interest rate.

Time Period

The longer time period has lesser interest rates which get reflected in lower EMI. But at the same time, the overall interest cost increases.

Income or Salary

Banks do prefer salaried employees for loans because of the regular and stable source of income. A person working on PSUs or MNCs with a higher salary has a good chance of getting a higher loan amount at a lower interest rate.